Auction Bidding Strategy: 7 Winning Tactics

1. Set a ‘soft price’ and a ‘hard price’

Auctions are designed to be emotionally charged, with selling agents constantly badgering the crowd to bid higher and higher. So, before bidding at auction, you should first set two essential amounts — a ‘soft price’ and a ‘hard price’. 

The soft price is the ideal number you would like to pay; typically, this figure represents how much you think the property is worth — or at least how much you’re willing to pay. The hard price is your walk-away, the highest end of your budget, and you should not bid over this figure. 

Setting a hard price can remove much of the excitement because you have a limit you can’t exceed. If bidding goes beyond that figure, you can just walk away and look for another property. 

» MORE: How much can I afford to borrow for a home loan?

2. Get a buyer’s agent to bid for you

Having a professional buyer’s agent by your side during the bidding process can be a significant advantage. Look for an agent with extensive auction experience. They can read the room and anticipate the actions of rival bidders, giving you a competitive edge. 

Auctions can be intimidating, especially for first-time bidders who are completely unfamiliar with the process. However, with a well-discussed strategy and an effective buyer’s agent by your side, you can bid with confidence, knowing that you have a professional guiding you. 

» MORE: 5 auction tips for first home buyers

3. Wait for bidding to start

Before bidding begins, you should size up the competition.

Start by checking with the selling agent to see how many sales contracts they’ve handed out and how many bidders you’ll be up against. Avoid showing too much interest in the property when you chat with the agent — that’ll give them leverage when upping the pressure. Plus, you don’t want to appear desperate.

Next, begin observing the other bidders in the room. Understanding your competition is essential, so pay attention to body language and behaviour — notice who looks nervous, who appears confident and who’s trying to misdirect and confuse others. 

Keep an eye on your competition throughout the bidding, but stay focused on what matters most: securing a property for a fair price.

» MORE: How to research the history of a property

4. Or, open the bidding yourself

By opening the bidding, you are firing the first shot. Ideally, this proactive move demonstrates to the competition that you are serious about obtaining the property. 

If you learned that competition is thin after chatting to the selling agent, you may want to kick things off with a smaller bid. Just be aware that auctioneers aren’t likely to accept a ridiculously low offer.

5. Slow the increments

Bidding at auctions usually begins with large increments, depending on the size and value of the property, but even auctions for smaller properties are likely to start with $10,000 or $5,000 increments. 

Remember, you are not obligated to follow the auctioneer’s lead and can always throw in a smaller increment bid instead. If you can slow the bidding down to $2000 or even $1000 incremental bids, you may be able to get the property for less. 

If you have one, your buyer agent should be able to judge by the room’s mood if the bidding is starting to slow down and suggest the best time to throw in a smaller bid. While the auctioneer may initially reject a smaller bid, they will be more inclined to accept one once the bidding from your competitors stops.

» MORE: What is the reserve price for an auction?

6. Bid confidently and without hesitation

Confident bidding suggests to your competition that you plan to buy the property regardless of what they do. The aim here is to intimidate the other bidders without being rude or overly aggressive. 

As long as you are still bidding within your hard limit, you can continue to push the price up. You could do this almost immediately after someone else lodges a bid, especially if the auction is nearing the pointy end and the increments are down to $1000 or $2000. 

Relentless bidding can be a powerful deterrent, especially if you’re competing against fellow first time buyers already intimidated by the process.

However, if you find that you’re the one who’s intimidated, take a step back. If you feel entirely out of your depth and can’t bid confidently, use the opportunity to learn from experience.

7. But don’t overbid unnecessarily

Putting in a large, oversized bid toward the pointy end of the auction to scare away any remaining competition is a risky strategy that could easily backfire. 

For example, you may bid $20K above the previous bid to secure the property, but a much lower bid, say $5K, could have been enough. 

Throwing a knockout punch is all very well if it’s still comfortably within your budget and you have your heart set on buying the property. But why spend more than required? The best way to win at auction is by paying only slightly more than the second-highest bidder. 

» MORE: Understanding property appraisals and valuations

8. Have the top offer if the property is passed in 

It can be hard to get the timing right for this tactic, but as long as you’re within your budget, you should aim ahead in the bidding if the property is passed in. 

In this scenario, when bidding hasn’t met the reserve, the selling agent will give the highest bidder the first opportunity to negotiate with the vendor. This position could be highly advantageous if the vendor is very keen to sell the property. 

If you finish second in the bidding when the property is passed in, you’ll only get a chance to negotiate if the highest bidder can’t agree on a price.